updated 10:45 am EST, Mon November 15, 2010

Network called costly, difficult

The first brand partners for a European expansion of iAd will be announced this week, according to the Financial Times. The company has so far only dipped its marketing toes into Europe via the UK. FT reports, in fact, that Apple has twice delayed the upcoming expansion in recent weeks, and in some instances been prepared to accept prices below a $1 million minimum in order to attract high-profile names.

"Apple is in a weaker position than you'd think," one media agency's digital leader is quoted as saying. The industry is believed to be reacting poorly to iAd at the moment as a result of high fees, and a slow production process, which requires Apple's involvement in development. Some clients, notably Adidas and Chanel, are noted to be withdrawing from the program. "They [Apple] are expensive and a pain to deal with," another agency's digital chief says.

"Apple is still figuring out how to sell advertising," claims a senior marketing group executive. "You don't just become a sell-side media company overnight. The infrastructure is missing at Apple right now." He adds, "Clients don't really take it that seriously yet. It goes in the experimental category, along with most of the rest of mobile advertising."

Potential European clients for iAd are believed to include L'Oréal, Renault and Nestlé, which may have two or three campaigns in action for iPhone apps in early December. Most campaigns are not expected to launch until next year.

Alexandre Mars, the CEO of mobile marketer Phonevalley, suggests that most advertisers have been happy with iAd. "They had some issues with the timing," he says. "The interaction with Apple was not easy." At the same time, Campbell Soup's manager of interactive marketing, Patti McGreal, comments that her company's iAds have shown an 0.8 percent clickthrough rate, which is actually three to 10 times better than for regular banners.

I sure hope Apple gets something going

with iAd because lately the stock is looking kinda sick since iPad sales failed to meet expectations. Ad revenue would almost be a freebie if Apple could just corner some high-profile clients. In this case, Apple is going to have to adjust to them instead of them adjusting to Apple. Those companies are just too set in their ways even though they have a good opportunity in front of them. Apple can little afford to make mistakes or else share price will pushed down well below $300. Apparently a $20 billion quarter just isn't enough to do the trick.